BILL ANALYSIS Ó SENATE COMMITTEE ON EDUCATION Senator Carol Liu, Chair 2015 - 2016 Regular Bill No: AB 2506 ----------------------------------------------------------------- |Author: |Thurmond | |-----------+-----------------------------------------------------| |Version: |May 27, 2016 Hearing | | |Date: June 22, 2016 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |Yes | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant:|Lynn Lorber | | | | ----------------------------------------------------------------- Subject: Student financial aid: Chafee grant awards SUMMARY This bill provides that an eligible current or former foster youth is entitled to receive a Chafee grant award, and requires postsecondary education institutions to meet eligibility requirements to receive Chafee funds, similar to existing provisions of the Cal Grant program. BACKGROUND Existing law: 1) Establishes the California Student Aid Commission for the purpose of administering specified student financial programs. (Education Code § 69510, et seq.) 2) Establishes requirements for postsecondary education institutions to participate in the Cal Grant program, and requires, for the 2012-13 and subsequent academic years, an institution to maintain a graduation rate above 30% and a three-year cohort student loan default rate of less than 15.5%. (EC § 69432.7) 3) Establishes the federal John H. Chafee Foster Care Independence Program to provide, among other benefits, education and training vouchers to qualifying current and AB 2506 (Thurmond) Page 2 of ? former foster youth. (United States Code, Title 42, § 677) ANALYSIS This bill provides that an eligible current or former foster youth is entitled to receive a Chafee grant award, and requires postsecondary education institutions to meet eligibility requirements to receive Chafee funds, similar to existing provisions of the Cal Grant program. Specifically, this bill: Chafee grant entitlement 1) Provides that, beginning with the 2017-18 academic year, a current or former foster youth is entitled to a Chafee grant award. 2) Requires the California Student Aid Commission (CSAC) to allocate the Chafee award if the current or former foster youth meets both of the following criteria: a) He or she meets the existing Chafee grant requirements. (See #2 in Comments.) b) He or she submits a Free Application for Federal Student Aid and a Chafee grant application between January 1 and September 2 each year for the academic year beginning in the fall of that calendar year. 3) Provides that the amount of any individual Chafee grant award depends on the cost of attendance at the qualifying institution at which the student is enrolled. 4) Prohibits the award amount from exceeding the amount of the calculated financial need for each student. Standards for qualifying institutions 5) Establishes the standards for postsecondary educational institutions to be classified as qualifying institutions for the purposes of the Chafee Educational and Training Voucher program, to the extent permitted by federal law. 6) Requires the CSAC to certify annually by October 1 a AB 2506 (Thurmond) Page 3 of ? postsecondary educational institution's latest three-year cohort default rate and graduation rate as most recently reported by the United States Department of Education. 7) Requires the following standards to apply in determining an institution's eligibility for the use of initial and renewal Chafee grant awards by its students: a) Provides that an otherwise qualifying institution with a three-year cohort default rate that is 15.5% or higher, as certified by the CSAC, is ineligible for the use of Chafee grant awards. b) Authorizes an otherwise qualifying institution that becomes ineligible to regain eligibility for the subsequent academic year after satisfying a) - d). This bill provides that an institution is to immediately regain its eligibility if the United States Department of Education corrects or revises the institution's three-year cohort default rate or graduation rate such that the requirements in a) - d) are met. c) Provides that an otherwise qualifying institution for which no three-year cohort default rate or graduation rate has been reported is provisionally eligible for Chafee grant awards until a three-year cohort default rate or graduation rate has been reported for the institution by the United States Department of Education. d) Provides that, beginning with the 2017-18 academic year and annually thereafter, an otherwise qualifying institution with a graduation rate of 30% or less for students taking 150% of less of the expected time to complete degree requirements, as reported by the United States Department of Education and certified by the California Student Aid Commission (CSAC), is ineligible for the use of Chafee grant awards. 8) Exempts from these standards institutions: a) With 40% or less of undergraduate AB 2506 (Thurmond) Page 4 of ? students borrowing federal student loans, using information reported to the United States Department of Education for the prior two academic years. b) Located outside of California. 9) Provides that provisions relative to the standards for qualifying institutions are not to preclude an eligible Chafee grant recipient who chooses to attend an institution outside of California from using Chafee funds at that institution. California Student Aid Commission 10) Requires the California Student Aid Commission (CSAC) to do all of the following: a) Notify initial or renewal recipients seeking to attend, or attending, an institution that is ineligible for Chafee grant funds that the institution is ineligible for the use of initial awards for the academic year for which the student received the initial award. b) Provide initial and renewal Chafee grant recipients seeking to attend, or attending, an institution that is ineligible for Chafee grant awards with a complete list of all California postsecondary educational institutions at which the student would be eligible, pursuant to state standards for qualifying institutions, to receive an unreduced Chafee grant award. Miscellaneous 11) States legislative findings and declarations relative to limited access to the Chafee grant, the importance of quality education, and the poor educational outcomes for foster youth. STAFF COMMENTS 1) Need for the bill. According to the author, "AB 2506 is seeking to address the low rates of college persistence and AB 2506 (Thurmond) Page 5 of ? completion among youth in foster care. There are two deficiencies in current law: the first is a lack of financial support for current and former foster youth who are attending college. Unfortunately, the funding available to the Chafee Education and Training Vouchers (ETV) is inadequate to meet the current demand. In the 2014-15 school year, 4,609 students applied for the Chafee and were determined eligible; however, 1,115 eligible applicants did not receive a grant. The second deficiency is current law is the ability to use the Chafee ETV at postsecondary institutions that do not meet baseline performance measures, including acceptable rates of graduation or loan default payment. Studies have shown that these often for-profit colleges market specifically to vulnerable student populations, including veterans and foster youth, and use their limited financial aid with little chance of earning a degree." 2) Chafee eligibility requirements. To qualify for a Chafee Education and Training Voucher (ETV), students must: a) Be a current or former foster youth, with dependency established or continued by the court between ages 16-18. b) Be under the age of 22 years as of July 1 of the award year. Students must fill out the Free Application for Federal Student Aid, or California Dream Act Application, and the California Chafee grant application. Currently, there is no application deadline or guarantee of funds, and applications are processed on a rolling basis until all funds are expended. This often results in students not learning whether they received a grant until well into the school term. The Chafee ETV is not an entitlement, unlike the Cal Grant program. This bill make the Chafee grant an entitlement in California; an eligible student would be awarded a grant, regardless of sufficient or available funding. 3) Qualifying institutions. The Chafee ETV may be used at any eligible California college as well as colleges in other AB 2506 (Thurmond) Page 6 of ? states. In California, students may use the Chafee grant at career and technical schools, California Community Colleges, the California State University, the University of California, independent colleges, and private colleges. Existing law requires postsecondary education institutions to maintain, in order for students to use Cal Grants to attend those institutions, a graduation rate above 30% and a three-year cohort student loan default rate of less than 15.5%. This bill requires institutions to meet the standards established in statute for participation in the Cal Grant program. The changes proposed by this bill could affect existing Chafee grant recipients if they attend an institution that does not meet the requirements for qualifying institutions. Staff recommends an amendment to add a grandfather clause, thereby allowing existing Chafee recipients to continue attending their current institution. 4) Administration of the Chafee. The California Student Aid Commission administers the Chafee ETV, which is funded by federal and state monies, through a Memorandum of Understanding (MOU) with the California Department of Social Services. Staff recommends an amendment to state intent that the requirements of this bill supplement the existing requirements of the MOU, thereby ensuring issues such as maximum program awards are addressed. 5) Funding. In California, the Chafee ETV provides up to $5,000 in grants to current and former foster youth. The budget for the program is approximately $11.5 million, which is evenly split between federal funds ($5.6 million) and the state General Fund. State funding for the program is accounted for in the Department of Social Services budget. The 2016 Budget Act includes an additional $3 million for the Chafee ETV. The maximum Chafee grant is $5,000 per academic year; the average awarded grant in 2014-15 was $3,251. The program serves about 2,228 California students. 6) Fiscal impact. According to the Assembly Appropriations Committee, this bill imposes: AB 2506 (Thurmond) Page 7 of ? a) Estimated additional General Fund costs of $4 million in the first year for entitlement program awards, based on 1,230 additional awards and an average award of $3,234. There were 1,115 eligible applicants that, under the current Chaffee program, did not receive an award in 2014-15 due to insufficient resources. In addition, the California Student Aid Commission (CSAC) indicates that another 845 applicants were deemed ineligible from due to lack of a single piece of required information. CSAC expects that new administrative procedures soon to be implemented to assist such applicants will increase eligibility, which would lead to an entitlement award. Annual costs would increase to around $11 million in the third year and thereafter. b) Administrative costs (General Fund) to the CSAC of about $60,000 one-time and $270,000 ongoing for four positions to implement the entitlement program. The CSAC indicates that the Chafee program is relatively labor intensive due to the population it serves and the need to coordinate among various agencies. SUPPORT Alameda County Court Appointed Special Advocates California Alliance of Child and Family Services California CASA California Community Colleges Chancellor's Office California State Student Association California Student Aid Commission Casa de Amparo First Place for Youth Fred Finch Youth Center iFoster John Burton Foundation for Children Without Homes Los Angeles Area Chamber of Commerce Mission College, Student Enrollment & Financial Services National Association of Social Workers, California Chapter National Center for Youth Law New Alternatives, Inc. Skyline College, Financial Aid Office AB 2506 (Thurmond) Page 8 of ? University of Southern California VOICES Youth Centers of California Individuals OPPOSITION None received. -- END --